HMRC Increase Compliance Checks for R&D Tax Credit Claims
HMRC has significantly increased its level of scrutiny of R&D tax credit claims. What was once a relatively low‑intervention process has evolved into a regime characterised by detailed compliance checks, longer processing times, and more frequent enquiries.
This shift is largely a response to the rapid increase in claims submitted in recent years and to HMRC’s concerns about error, misuse, and abuse of the scheme.
For businesses making genuine claims, this doesn’t mean R&D tax relief is disappearing — but it does mean the standard of evidence, narrative, and calculation has never been more important.
Why HMRC Has Increased Compliance Checks
HMRC has been clear that the increase in compliance activity is intended to:
Tackle incorrect or inflated R&D claims
Deter outright fraudulent behaviour
Restore confidence in the integrity of the R&D tax relief schemes
The rapid expansion of the R&D advisory market — including the emergence of inexperienced providers presenting the scheme as “easy”, “risk‑free”, or “guaranteed” — has inevitably led to a rise in non‑qualifying claims.
HMRC has responded by asking more questions, requesting more documentation, and applying greater scrutiny across both SME and RDEC claims.
Longer Processing Times Are Now the Norm
One consequence of increased compliance activity is longer processing times for R&D claims — even where no enquiry is ultimately opened.
HMRC has acknowledged that enhanced checks will delay payments, and many businesses now face longer timelines than in previous years. This can place pressure on cash flow, particularly where R&D tax relief has become a planned funding source rather than an occasional benefit.
Businesses should therefore assume:
Payment timelines may be unpredictable
Additional information requests are more likely
Enquiries may arise even for legitimate claims
What HMRC Is Focusing on During Reviews
HMRC’s compliance checks typically centre on three core areas:
1. The Technical Narrative
HMRC expects a clear, well‑structured explanation that shows:
What scientific or technological advance was being sought
What technical uncertainties existed
Why those uncertainties could not be readily resolved by a competent professional
How those uncertainties were overcome (or not)
Generic descriptions, marketing language, or superficial explanations are unlikely to withstand scrutiny.
2. The Financial Calculations
HMRC will closely examine:
How employee, subcontractor, EPW and consumable costs were calculated
The logic behind time or cost apportionments
Whether costs align with the technical activities described
Unclear, inconsistent or unsupported calculations are a common trigger for further questions or enquiry.
3. Evidence and Records
HMRC increasingly expects contemporaneous evidence to support both the technical and financial elements of the claim, including:
Emails, project plans, drawings, test reports and design iterations
Records showing who worked on the project and when
Invoices, payroll records and bank statements
Supporting evidence for subcontractors and EPWs
Where evidence is missing or incomplete, HMRC may disallow part or all of a claim.
How Businesses Can Reduce Risk and Delays
While increased compliance cannot be avoided entirely, businesses can materially reduce risk by:
Submitting claims early, allowing time for queries or delays
Completing all relevant sections of the CT600 accurately and fully
Providing a robust technical report, not a template or generic narrative
Clearly explaining cost calculations and assumptions
Ensuring all figures are evidenced and traceable
HMRC has stated that submitting additional supporting information — such as a detailed R&D report — can help claims progress more smoothly through the review process.
The Importance of Using an Experienced R&D Adviser
HMRC has made it clear that where claims are incorrect, inflated, or deliberately misleading, penalties may apply — and in serious cases, recovery action can extend beyond the company itself.
Working with an experienced R&D tax specialist helps ensure that:
Only qualifying activities are included
Costs are calculated correctly and defensibly
Claims are prepared with HMRC scrutiny in mind
Support is available if HMRC raises questions or opens an enquiry
At Vantage R&D, we welcome HMRC’s focus on improving the integrity of the scheme. High‑quality, compliant claims protect genuine innovators and ensure R&D tax relief remains sustainable for businesses that truly qualify.
Are You Prepared for Increased HMRC Scrutiny?
HMRC’s enhanced compliance checks are not temporary. Businesses should assume that every claim may be reviewed and prepare accordingly.
If you are unsure whether your claims meet the current standard of scrutiny — or if you want to ensure future claims are fully compliant and defensible — expert advice is essential.
